Planet Money

12:27 pm

Wed March 6, 2013

If The Catholic Church Were A Business, How Would You Fix It?

Now that Pope Benedict XVI has officially gone into retirement, the next leader of the Catholic Church has a lot to consider, including finances.

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The next pope will be the spiritual leader of the world's Catholics. He will also be leading a multibillion-dollar financial empire. And from a business perspective, the Catholic Church is struggling.

We talked to several people who study the business of the church. Here are a few of the issues they pointed out.

1. Globally, the church's employees are in the wrong place.

Most Catholics live in Latin America, Asia and Africa, and that's also where growth in church membership is higher. But only about half of all priests are in Latin America, Africa and Asia.

If the church were a business, the CEO would just transfer existing workers to other parts of the world. But the church just isn't organized to make that kind of thing happen.

"On matters on faith and morals, the church is very centralized, very hierarchical," says Chuck Zech, director of the Center for the Study of Church Management at Villanova University. "But on the temporal issues of finances and actually running the day-to-day operation, each diocese is very independent."

A diocese is a geographical area with a bunch of churches in it. Run by a bishop. And they all basically raise their own money, through collections, and make their own budget.

2. In the U.S., the church doesn't take advantage of its size.

Because each diocese makes most of its own business decisions, "the church is missing out on purchasing power, procurement, economy of scale," says Kerry Robinson, director of the National Leadership Roundtable on Church Management.

If all the Catholic dioceses and schools and hospitals in the U.S. got together to negotiate bulk prices for the things they needed — just ordinary stuff like office products and transportation — the church could save billions of dollars a year, Robinson says.

3. The church's financial reporting is a mess

"Without systemic accounting and disclosure, there is enough doubt these days about how money is being managed that we don't whether the hungry are being fed, the naked are being clothed and those in need are getting health care and education," says Jim Post, a management professor at Boston University.

There is no standard financial reporting for church dioceses. This was a huge frustration for everyone we talked to: It's hard to figure out how to fix what's wrong with the church's business if you can't figure out what's going on with the money.

And as the Catholic Church has recently discovered, this lack of transparency can have much darker implications.

Tom Doyle, a priest with a Harvard MBA, says one of the big organizational challenges to come out of the recent child sex abuse scandal is the erosion of confidence. People stopped trusting that the Catholic Church would tell them the truth.

Doyle used to work for Deloitte & Touche, the big consulting firm, before he became a priest.

"How do you get trust back? You earn it," he says. "So we are going to have to err on side of being more transparent about things than we have in the past."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

As we wait for the conclave of cardinals that will choose the next pope, we're going to hear now about one aspect of the pope's job. He is, of course, the spiritual leader of the world's Catholics but he also leads a multibillion-dollar financial empire. And from a business perspective, the Catholic Church is struggling, losing money and members - at least in the U.S. So our Planet Money team brought in a few management consultants and asked what needs to change. Here's Caitlin Kenney with their answers.

CAITLIN KENNEY, BYLINE: The Catholic Church is not a business, but there are things about it that sort of make it look like one.

TOM DOYLE: The church provides goods and services. The Catholic Church has an identifiable brand that evokes both positive and negative responses.

KENNEY: Tom Doyle should know. He's a former management consultant and a priest. And he says when you look at it like a business, the church has been wildly successful - growing from the original apostles...

DOYLE: Started with 11, has 1.2 billion members today. That's almost 2,000 years of an annual growth rate of 1 percent. That's pretty long and pretty incredible growth.

KENNEY: But lately, Father Doyle admits, things have been difficult for the church. And our consultants agreed, although they frame the problems of the church in classic management speak.

CHUCK ZECH: Unfortunately, the church in this time period has a real misallocation of its resources.

KENNEY: Chuck Zech is the director of the Center for the Study of Church Management at Villanova University. And by resources, he means basically priests. They aren't where they need to be.

ZECH: Most of the Catholics - about two-thirds - and most of the growth in Catholics is occurring in Latin America or Asia or Africa. They only have, though, about one-third of the priests.

KENNEY: In other words, the company's employees aren't where the customers are. Now, as a consultant, Zech sees an easy solution for the shortage of priests: expand the job description. Let women and married men do the work. But this is where it gets very tricky for a consultant to walk into a church. A pope will only take that kind of direction from God. OK. Our consultants have another idea: if the church were a business, the boss, the CEO would just transfer existing workers to other parts of the world, move them from one office to the other. But Zech says the church isn't organized that way.

ZECH: On matters of faith and morals, the church is very centralized, very hierarchical. But on the temporal issues of finances and actually running the day-to-day operation, each diocese is very independent.

KENNEY: A diocese is a geographical area with a bunch of churches in it run by a bishop, and they all basically raise their own money through collections and run their own budgets. Think of the Catholic Church as a big conglomerate with lots of little independent operators, almost like a franchise model. And that kind of organization is hurting the church in other ways. Kerry Robinson is the director of the National Leadership Roundtable on Church Management.

KERRY ROBINSON: The church is missing out on purchasing power, procurement, economy of scale.

KENNEY: Robinson says just imagine if all the Catholic diocese and hospitals and schools in the U.S. got together to buy the things they needed - to buy printer paper or coffee.

ROBINSON: Something that everyone in the Catholic Church utilizes, maybe it's transportation or utilities or office products. Collectively, we could bargain for the better price.

KENNEY: And that, she says, could save the church billions of dollars a year. Of course, this would involve all the separate parts of the church, telling each other what they actually spend, how much money they have, what their finances are. And Boston University Professor of Management Jim Post says right now, this is another challenge for the church: there is no set standard of financial reporting.

JIM POST: Without systematic accounting and disclosure, there's enough doubt these days about how money is being managed that we don't know whether the hungry are being fed and the naked are being clothed and those in need are getting health care and education.

KENNEY: This was a huge frustration for all our consultants: a lack of transparency can hurt your brand. It can drive away your customers. And as the Catholic Church has recently discovered, this lack of transparency could have much darker implications.

Father Tom Doyle says one of the big organizational challenges to come out of the recent child sex abuse scandal is the erosion of confidence. People stop trusting that the Catholic Church would tell them the truth. Before he became a priest, he used to work for Deloitte & Touche, the big consulting firm, and he says his advice in times of crisis is the same for the church as it would be for any company.

DOYLE: How do you get trust back? You earn it. You have to earn it, right? And so we're going to have to air on the side of being more transparent about things than we have in the past.

KENNEY: Business advice for the next 2,000 years. Caitlin Kenney, NPR News.

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You're listening to ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.